Numbers on In-Game Advertising

[HaemishM]

Kagan Research has released a new report about advertising in video games.

Advertisers are finding games a valuable medium for getting their message across. Revenues from "advergaming" and in-game advertising are expected to rise sharply in the next few years.

By 2010, 54 million households in the US will own at least one video game console, and most will have a portable system and non-portable one, according to a new report by Kagan Research. The report also finds that US video game sales totaled almost $10 billion in 2004, and will rise to $16 billion by 2007, an increase of 61%. Software sales totaled $6.3 billion in 2004, Kagan estimates, and will rise to $8.0 billion in 2008. 

With that big a market, it's natural that advertisers want to find a way to reach game players. But there are no "commercial breaks" during game playing, so it is difficult. The two primary solutions are "advergaming," games designed around a product and made to promote it, and in-game advertising, in which products are placed in games much as they are in movies — in the background, in the hands of game characters, or elsewhere.

Yankee Group projects that In-game advertising will total $562.5 million by 2009, up from $34 million in 2004, while advergames will account for $312.2 million in ad revenues in 2009, compared to $83.6 million in 2004. Interestingly, advergames accounted for more ad revenue than in-game ads in 2003 and 2004, and will do so in 2005, but through the rest of the decade, in-game ads are expected to be the dominant form of game-related advertising.

The estimates are a considerable step up from Yankee Group's prediction last year, which had in-game advertising and advergaming totaling just $260 million by 2008 (compared to well over $700 million in the latest release).

As the Yankee Group points out, using video games as an advertising platform has quite a few advantages. For one, the core group of video game players, men ages 18 to 35, represents a valued target market. Additionally, game players seem to recall ads in games better than they do in other mediums, and many game players spend more time playing than they do watching TV or listening to the radio. Finally, advertising allows game companies to offset development costs.

54 million households by 2010 with video game consoles of some type? That pie is looking mighty nice.

[Bunk]

Product placement inside of games makes perfect sense. Unless of course you do something stupid like putting Pizza Hutt in Norath...

Excedingly stupid or obtrusive ads tend to piss users off. Its much the same to me as annoying jingles on the radio, or just outright annoying tv comercials. They piss me off. The problem is, I don't think advertisers care, because its the annoying ads that you remember. I won't be at all suprised if we start seeing inappropriate and stupid product ads everywhere in games soon.

Done right, it wouldn't bother me though. Take a game like San Andreas. You could drop product placement all over a game like that without it seeming obtrusive. Mind you, you'll probably never see any product placement in a Rockstar game due to all of thier bad publicity.

Now the idea of building games around a product sounds retarded on the surface, but really, we see similar stuff all the time. Pick any Saturday morning cartoon that has a line of action figures. The action figures don't get made because the show was popular. The show got made to sell the action figures.

[schild]

The complaints about Pizza in Norrath were just sad. Sadder than the /pizza command itself. Particularly since /pizza is the most UNINTRUSIVE in-game advertising created.

I wonder if companies are going to have to start paying to have their cars included in shit like Gran Turismo, Ridge Racer, Midnight Club and Forza.

[HaemishM]

I imagine they already do pay, just based on how many logos and shit are included in Juiced.

[schild]

Hmmmm, no, I don't think so. It's a privelage to use the Caddillac logo to appeal to kids. They know no one will give a fuck about fake cars. Their game couldn't get made without that shit. I'm pretty confident companies are paying the car manufacturers licensing fees. Much like EA pays the NFL.

[Krakrok]

Yes. You have to pay in order to include a specific brand name car in your game. In some cases you can't even pay to do it. They tell you to lick it.

[Margalis]

One reason the GT series doesn't have damage is the car manufacturers don't want to see their vehicles getting smashed up.